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Fennovoima, a consortium of Finnish and Russian companies, said it terminated a contract that was awarded to Russia's Rosatom for a nuclear power plant amid operational difficulties.
The consortium cited operational and workforce risks due to the country's military offensive in Ukraine as reasons for terminating the contract.
The decision, enforced with "immediate effect", means that the Hanhikivi 1 nuclear power plant — which was being developed by Fennovoima with Rosatom's Finnish unit Raos Project — will no longer be delivered, the Helsinki-based company said in a statement on Monday.
“Unfortunately, the termination of the EPC contract is estimated to have a significant employee impact in Fennovoima and is expected to impact also the supply-chain companies and Pyhajoki region," Fennovoima chief executive, Joachim Specht, said, referring to a municipality in Finland.
"Our main objective is to support our employees by keeping them informed and work in close co-operation with both our employees and employee representatives," Mr Specht said. He added that the company is focusing on preserving the site.
The future of the Hanhikivi 1 plant was thrown into uncertainty after Russia began its military offensive in Ukraine in February. The final construction permit was supposed to be granted by the end of 2022, but Moscow's actions forced the Finnish government to re-evaluate the project.
Mika Lintila, Finland's Minister of Economic Affairs, said it would now be impossible for the government to grant the permit.
"Fennovoima's decision is clear. The owners' solution is to be welcomed. It would have been virtually impossible to take the project forward. In the ministry, we are evaluating the effects of the solution from the authority's point of view," he said in a tweet.
However, Raos Project, which is in charge of the construction, has insisted on proceeding with the project.
Esa Harmala, chairman of Fennovoima's board, acknowledged the "negative impacts" the company's decision will have, but has pledged to mitigate these.
“The decision to terminate the EPC contract with Raos Project is not made lightly. In a such a large project, there are significant complexities and decisions are made only after thorough considerations," he added.
Fennovoima said it will provide more information and address queries regarding the matter during a press conference on Monday.
The total investment cost for the Hanhikivi 1 nuclear power plant was estimated to be between €6.5 billion ($6.8bn) to €7bn, which includes the initial plant costs, financing and waste management, according to Fennovoima's website.
Fennovoima's stakeholders include Finland's Outokumpu, Fortum and SSAB, which own two-thirds of the venture, while Raos Voima holds the rest.